Uber And Lyft's Threat To Go Nuclear In California Worked At The Last Minute

Illustration for article titled Uber And Lyfts Threat To Go Nuclear In California Worked At The Last Minute
Photo: Mario Tama / Staff (Getty Images)
The Morning ShiftAll your daily car news in one convenient place. Isn't your time more important?

Faced with the haunting prospect of treating their drivers like human beings, Uber and Lyft threatened to cut them all off in California and pull its operations entirely. At the last minute, the state gave in. All that and more in The Morning Shift for August 21, 2020.

Advertisement

1st Gear: Uber And Lyft Saved At The Last Minute After Nearly Shutting Down In California

Ride-hailing companies like Uber and Lyft are in the middle of an intense battle with the state of California, which has law on the books that require the firms to classify drivers as employees, and not just independent contractors. But Uber and Lyft have yet to comply. Doing so would require Uber and Lyft to offer benefits—something that’s likely to cut into the companies’ bottom-lines.

Advertisement

Uber and Lyft had stated they would shut down operations in the state as they figure all of this out, but then something happened. From Reuters:

The companies had threatened an imminent shutdown as early as midnight across California. They said they would be unable to comply with the state’s new law, which considers their drivers employees and not contractors, entitled to benefits such as minimum wage, overtime, sick pay and unemployment insurance.

That “something” that happened was a ruling by an appeals court on Thursday basically giving the companies more time. From the story:

The last-minute ruling, in a case with potential ripple effects across the global gig economy, means drivers can continue working as independent contractors while the appeals court considers the question of driver status.

[...]

The court, which has scheduled arguments in the case for Oct. 13, is unlikely to issue a final ruling before a Nov. 3 ballot measure puts the decision in the hands of California voters.

Advertisement

For a bit of background, NPR discusses Uber and Lyft’s argument against California’s push for the companies to abide by a labor law that would require drivers to be classified as employees. From NPR:

Uber and Lyft maintain that the law, known as Assembly Bill 5, or AB5, does not apply to them, saying they are not transportation businesses but tech platforms. In May, California’s attorney general, along with prosecutors in Los Angeles, San Diego and San Francisco, sued the companies to force them to reclassify their drivers.

[...]

After Schulman ordered them to comply with the law while the state’s lawsuit proceeds, Uber and Lyft said they could not make that switch quickly and would have no alternative but to shut down their services for an indefinite period. They warned that converting drivers to employees would force them to employ fewer drivers, reduce service, increase wait times and raise prices.

Advertisement

At least for now, based on the court’s reprieve, Uber and Lyft will continue to operate in the important market of California, and drivers won’t be left out to dry because the companies wanted to pack up all their toys. In November, though, the issue could wind up in the hands of voters. Ride-hailing companies wanting to maintain the independent contractor classification are in support of the ballot strategy, though they do plan to make a few changes to the current setup by offering some benefits according to Reuters, which writes:

Lyft, Uber, DoorDash, Instacart and Postmates are spending more than $110 million to support the ballot measure. It would enshrine drivers’ current contractor status, albeit with some added benefits, and overwrite the state’s gig worker law.

Advertisement

We’ll see where this goes. It’s an important issue that, per NPR, could affect hundreds of thousands of workers and millions of customers.

2nd Gear: Volkswagen Begins Production Of Its Most Important Electric Car, The ID.4

The Volkswagen ID.3 is a small hatchback that’s already driving around the streets of Europe. But it will not be coming to the U.S.

Advertisement

North America’s first taste of Volkswagen’s promising MEB electric platform will come in the form of a crossover called the ID.4, which just began production at Germany’s Zwickau plant alongside the SUV’s smaller Golf-like sibling.

Automotive News describes why this is important:

Volkswagen Group has begun regular production of the ID4 crossover, the second model in a planned family of electric vehicles that will be built and sold around the world, the company said Thursday.

The ID family is the linchpin of the VW brand’s ambitious plan to build 1.5 million electric vehicles a year by 2025. The broader VW Group has said it will spend nearly $40 billion by 2024 to ramp up electric vehicle production in Europe, China and the United States.

Initial production of the ID4 has begun at VW’s plant in Zwickau, Germany, which was converted to build electric vehicles exclusively at a cost of $1.4 billion.

Advertisement

We should see ID.4s running around American streets by the end of the year, with production spreading to Tennessee in 2022, according to the news site.

3rd Gear: Lithium Mining Company Is Cranking Up Output As It Places Faith In Increased EV Demand

Chile-based lithium mining company SQM isn’t letting the coronavirus pandemic, and associated affects on demand, put a damper on the company’s future mining output. That’s because the company believes that the world’s push towards electric vehicles will more than justify leaning into lithium mining.

Advertisement

Bloomberg breaks it down:

The Santiago-based company is gaining market share and forging ahead with expansions even after prices tumbled and some customers deferred shipments in the pandemic. Major peers are taking a more wary approach.

Advertisement

The story goes on:

While SQM expects demand in 2020 to be similar to last year, it remains optimistic about long-term consumption growth because of increasing expectations for car sales, electric-vehicle penetration rates and continued government incentives. Lithium is a key component in rechargeable batteries.

“Given the demand growth expectations in coming years, we feel comfortable with the higher level of inventories that are being built,” SQM said after reporting second-quarter income that beat the highest analyst estimates.

Advertisement

4th Gear: Washington, D.C. Auto Show Gets Pushed To Spring

The Washington, D.C. auto show is actually an awesome display of automobiles. I used to attend the event every years when I was a student at the University of Virginia, and president/founder of its sole car club, the “Virginia Automotive Club.” I thoroughly enjoyed going.

Advertisement

The event normally takes place in late January to early February, but now it’s shoved back to March 26 through April 4, Automotive News reports.

It’s probably fairly obvious why this is happening: COVID concerns, of course. The show’s organizers think the added time, along with strategic precautions, will make folks more comfortable with the idea of attending the car show in the Walter E. Washington Convention Center. From the news story:

Safety and social distancing protocols will also be implemented throughout the event, including timed ticketing, temperature checks, mandatory mask usage, density scanning, hand-sanitizing stations, wider aisles and overnight deep cleaning, among other efforts.

“We are certainly aware of the challenges facing all public events and facilities right now, and our hope is that the extra couple of months will make attending the show more enticing for more people,” Bushnell [spokesman for the Washington Area New Automobile Dealers Association, which organizes the event] said in an email. “We’re planning for a number of different scenarios, but this really is an unprecedented situation.”

Advertisement

5th Gear: Beijing Auto Show: Same Thing

Like many events around the world, auto shows are being delayed, and additional safety precautions are being implemented to combat the spread of the coronavirus. I mentioned this in the previous gear.

Advertisement

The Beijing Auto Show, as a major event in the world’s biggest automotive market, is an important one (certainly more so than the aforementioned D.C. auto show), and it’s coming up soon.

It’s going to be the first major car show in quite a while, if I’m not mistaken. Automotive News discusses timing and mentions precautionary measures taking place to make the Beijing Auto Show a reality. From the website:

The Beijing auto show, which was postponed from April due to the coronavirus pandemic that broke out in late January, is set to begin in late September in the Chinese capital.

The event, the country’s biggest auto show, will run from September 26 through October 5, its main organizer, the Beijing-based China Council for the Promotion of International Trade, said this week. Media previews will take place Sept. 26-27.

[...]

Organizers of the Beijing auto show said various measures will be implemented to ensure the safety of show participants and visitors, though it’s unclear if capacity at the indoor event will be limited.

Advertisement

Reverse: 1897: Oldsmobile Is Born

From History:

Ransom Eli Olds of Lansing, Michigan, founds Olds Motors Works—which will later become Oldsmobile—on August 21, 1897.

Advertisement

Neutral: Your Take On The Uber And Lyft Situation?

What are your thoughts on drivers being classified as contractors?

Sr. Technical Editor, Jalopnik. Always interested in hearing from auto engineers—email me. Cars: Willys CJ-2A ('48), Jeep J10 ('85), Jeep Cherokee ('79, '91, '92, '00), Jeep Grand Cherokee 5spd ('94).

Share This Story

Get our newsletter

DISCUSSION

They are clearly contractors. By established labor law, there is no conceivable way they are employees, which is why California had to pass this special law to begin with.

From the IRS website:

  1. Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?
  2. Financial: Are the business aspects of the worker’s job controlled by the payer? (these include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)
  3. Type of Relationship: Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?

Drivers answer NO to all three of those categories.

Yes, it’s shitty that Uber and Lyft don’t give the drivers better benefits. But that doesn’t mean we change what words mean.

Classifying these drivers as employees opens the door to a lot of other contractors doing functionally equivalent jobs being classified as employees as well. The only difference is political pressure.